Singapore, London (Reuters) – A person familiar with the situation said on Friday that the biggest stakeholder in HSBC Holdings (NYSE: HSBC), Chinese insurance giant Ping An, has advocated for the bank’s dissolution. People who know the situation say that Ping An has told HSBC’s board of directors that it wants to separate the company.
“Ping An welcomes any reform recommendations from investors that would improve HSBC’s operations and long-term value development,” a representative for the company said on Saturday.
In a statement on Friday, HSBC made no mention of Ping An’s role in the matter but defended its overall approach. “We feel we have the appropriate plan and are committed to implementing it,” a bank representative said via email.
According to reports, the idea would increase value for HSBC shareholders by separating the bank’s Asia businesses, which generate the majority of the bank’s revenue, from the rest of the company.
Noel Quinn has been the CEO of HSBC for more than two years, and he has made the bank more focused on Asia by moving global leaders to Asia and investing billions of dollars in the lucrative wealth management industry with a focus on the Asian market.
Some experts have also said that HSBC should split up its global operations, saying that the bank makes most of its money in Asia and that its global network is a waste of money.
Tensions in the geopolitical system
HSBC has been negotiating rising political tensions between China, Europe, and the US.
“The suggestion makes some political sense, but HSBC benefits from having a presence in both the West and Asia,” John Cronin, a banking analyst at Goodbody, said on Friday.
According to Reuters, Beijing has become frustrated with HSBC over sensitive internal and international legal and political concerns, ranging from China’s crackdown in Hong Kong to the US prosecution of a Huawei Technologies executive. Last September, the executive was freed.
After a 10-month assessment, the bank retained its London headquarters, rejecting the possibility of relocating its center of gravity to Hong Kong, the firm’s primary profit-generating region.
Asia was home to more than half of HSBC’s $49.6 billion in revenue and 66% of its profit before taxes last year. Hong Kong was HSBC’s largest market.
Both the London and Hong Kong stock exchanges list the bank.
According to Refinitiv statistics, Ping An had an 8.23% stake in the banking behemoth as of Feb. 11.
British media reported on the proposal for the first time last week but did not name the stakeholders.